Jumbo Loans: Financing High-Value Homes with Confidence
Are you in the market for a new home? If you’re a buyer with a larger budget, a jumbo loan can help you buy a more expensive home that might otherwise be difficult to finance with standard conventional loans.
What Is a Jumbo Loan?
A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). For 2025, the conforming loan limit for a single-unit property in most U.S. counties is $806,500. In high-cost areas, this limit can rise to $1,209,750. Loans above these thresholds are considered jumbo loans and are not eligible for purchase by Fannie Mae or Freddie Mac.
Ready to explore your jumbo loan options?
How to Get a Jumbo Loan
Securing a jumbo loan involves several key steps:
- Pre-Approval: Begin by consulting with a mortgage specialist to assess your financial situation and determine your eligibility.
- Application Submission: Provide necessary documentation, including income verification, credit history, and asset statements.
- Property Appraisal: An appraisal is conducted to determine the property’s value. For higher loan amounts, a second appraisal may be required.
- Underwriting Process: The lender reviews all documentation to assess risk and confirm eligibility.
- Loan Approval and Closing: Once approved, you’ll proceed to closing, where you’ll sign the final documents and secure your jumbo loan.
Throughout this process, our team at Redmond Mortgage Company is committed to providing personalized guidance to ensure a smooth and efficient experience.
Jumbo Loan Requirements
Qualifying for a jumbo loan typically requires:
- High Credit Score: A minimum score of 700 is often required; however, a score of 720 or higher may be needed for better rates.
- Low Debt-to-Income Ratio (DTI): Lenders prefer a DTI of 43% or lower, indicating a balanced income-to-debt ratio.
- Substantial Down Payment: Down payments of 10% to 20% are common, with some lenders requiring more based on the loan amount and borrower profile.
- Proof of Income and Assets: Comprehensive documentation of income, assets, and financial reserves is necessary to demonstrate the ability to repay the loan.
Benefits of Jumbo Loans
- Higher Loan Amounts: Finance luxury properties that exceed conforming loan limits.
- Flexible Loan Terms: Choose from various fixed or adjustable-rate options to suit your financial strategy.
- No Private Mortgage Insurance (PMI): Unlike some conventional loans, jumbo loans often do not require PMI, even with lower down payments.
- Competitive Interest Rates: Interest rates for jumbo loans can be comparable to, or even lower than, those for conforming loans, depending on the lender and borrower qualifications.
Why Choose Redmond Mortgage?
At Redmond Mortgage Company, we specialize in providing tailored mortgage solutions for high-value property purchases. Our experienced team understands the complexities of jumbo loans and is dedicated to guiding you through every step of the process. We offer competitive rates, personalized service, and a commitment to helping you achieve your homeownership goals.
Jumbo Loan FAQs
Financing a home is an important investment. It’s ok to have questions. We’ve compiled answers to the frequently asked ones, but don’t hesitate to ask more.
The biggest difference between a jumbo loan and a conventional loan is the amount of money you can borrow. Jumbo loans allow you to borrow more money to purchase your dream home, while conventional loans have lower limits. Additionally, jumbo loans may have stricter qualification requirements because the loan amounts are higher.
You’ll want to consider how much you’ve been able to save for a down payment, the value of the house you want to buy, and how the down payment amount impacts your potential mortgage.
Jumbo loans typically require down payments of 20% or more.
In some cases, loans under $1.5 million have lower down payment requirements at 10%.
The conforming loan limit is the maximum amount of money that can be borrowed for a mortgage using a conventional loan. This limit varies by county and by state. In most counties, the conforming loan limit is $647,200 (2022). However, in high-cost areas like Alaska and Hawaii, the limit is much higher at $$970,800.
If you’re looking for a home that’s outside of the conforming loan limits, you’ll need to apply for a jumbo loan.
When you close your jumbo loan to purchase a house, you’ll need to account for several costs, both upfront and those included in your ongoing monthly payment. These will be clearly outlined as your loan is processed and before you close.
Beyond your initial down payment, you’ll also pay closing costs, which cover expenses such as loan origination fees, an appraisal, title insurance, etc. These typically range from 2-3% of your total loan amount.
You can expect to pay slightly higher closing costs with a jumbo loan than you would with a conforming loan. This is because jumbo loans are more expensive for lenders to process and they need to recoup these costs.
If you’re interested in refinancing your jumbo loan, you’ll need to meet the same requirements that you did when you applied for the original jumbo loan. This includes having a good credit score and sufficient income. You’ll also need to have equity in your home. Equity is the portion of your home that you own outright.
If you’re looking to lower your monthly payments, you may be able to do so by refinancing into a jumbo loan with a lower interest rate. You may also be able to shorten the term of your loan, which will also lower your monthly payments. Keep in mind that if you refinance into a loan with a shorter term, you may end up paying more in interest over the life of the loan.
If you’re interested in jumbo loan refinancing, talk to our team about your options. We’ll be able to help you determine if refinancing is right for you.